Is it true that colored coins or digital assets (counterparty / ethereum / nxt assets / etc.) have an issue of paying fees?

Question

I'm looking to setup my own digital asset or coin on either counterparty or nxt assets or ethereum to distribute to my loyal customers, but I noticed that even if I created an account for my customers, they have no way of sending that token back to me when they wish to redeem it as these platforms require their transaction fees be paid in their native currency.

Is this a flaw in these systems or is there an alternative solution to this problem? Or what solutions have others come up with thus far?

Answer 1

Wallets for the platforms you mentioned work with both the native currency (obviously) and the tokens issued by the platform.

The assumption is that your customers will install a wallet on such a platform and create the accounts/addresses which they will use for their transactions.

Is this a flaw in these systems or is there an alternative solution to this problem?

I would say it is a requirement rather than a flaw; it was by design. The native currency is not really a currency (and no one, officially, advertises it as such); it is the fuel that makes the platform tick. If you want to do something with the platform you need to use the tools that the platform provides. That includes your customers using the platform to send/receive your tokens.

Or what solutions have others come up with thus far?

I don't see a viable work-around. Either your customers buy some of the platform's native token or you provide a completely centralized system that takes care of that, for your customers, behind the scenes.

Answer 2

I noticed that even if I created an account for my customers, they have no way of sending that token back to me when they wish to redeem it as these platforms require their transaction fees be paid in their native currency.

That's kind of true for Counterparty. The transaction fees are paid only in Bitcoin (which is a native currency of Counterparty), but not in Counterparty (XCP) which is the other native currency. If holders want to redeem their token(s) for a good or service, they only need to pay a small transaction fee (that goes to bitcoin miners) which is expected.

I wouldn't say other systems that do require their own currency for this are flawed, it's how they decided to do things, as karask noted. Counterparty's approach emphasizes the use of BTC while XCP have been only where necessary (at least that's been the case so far).

Answer 3

Agreeing with all of the above, especially the point about seeing the native tokens in these systems as a form of fuel, rather than purely and simply a currency.

Nxt has taken a couple of approaches to mitigate the issue of having to use native NXT tokens to pay tx fees (even if you're only trading/using Nxt-based Assets), and to make it as easy as possible to get native NXT.

The first possibility is to simply sell some of your Assets on the Nxt Asset Exchange, receiving NXT in exchange. Since most Nxt tx cost only 1 NXT, this isn't a massive cost, unless you're running a lot of dust transactions.

Secondly: we integrated a Shapeshift plugin directly into the Nxt client, allowing easy purchase of NXT using any of the crypto-currencies/tokens supported by Shapeshift.

There is a third step coming up to mitigate the "I need Nxt tokens" issue, but that's under wraps right now.

And, you can also look at the Ardor platform: a development of Nxt technology that uses a parent/child multiple blockchain structure. It will be possible, on Ardor, to create an entire child chain that uses only it's own native token, freeing users of this chain of the need to pay tx fees using Ardor itself.

Answer 4

Unfortunately, fees are part of the protocol and cannot be avoided.

However, there are some platforms that release users from this burden. For instance, as far as I know, the Colu platform (based on the Bitcoin blockchain) automatically covers all transaction fees (for free).

Hope this helps